Microsoft’s gaming division, Xbox, could be headed for another round of job cuts as part of a broader restructuring initiative aimed at improving profitability and reshaping its long-term strategy.
According to reports, the layoffs are expected to take place soon after the close of Microsoft’s fiscal year on 30 June. While the exact number of employees who may be affected remains unclear, the move would mark the second major round of cuts at Xbox within a year. In July last year, Microsoft’s company-wide restructuring had impacted around 9,000 employees, including teams within its gaming business.
The expected workforce reductions come amid a sweeping transformation under Asha Sharma, CEO, Xbox, who assumed leadership of the division earlier this year. Since taking charge, Sharma has introduced several changes designed to reposition the Xbox brand and reconnect with its core gaming audience. However, those efforts have yet to translate into stronger financial performance.
Reportedly, the latest restructuring could extend beyond layoffs, potentially affecting Xbox’s studio portfolio. Some gaming studios may face downsizing or closure, while certain departments, including marketing, are also expected to see budget reductions.
The company is reportedly preparing for what leadership has described internally as a “100-day Xbox reset.” The initiative is intended to streamline operations and address mounting business pressures.
Xbox has been grappling with declining profitability, slowing console sales and rising concerns over its future growth trajectory. Internal communications indicate that the gaming division’s profit margins have weakened significantly, prompting calls for a more sustainable operating model.
The business is also facing challenges on the hardware front. Escalating component costs and supply constraints are putting pressure on future console development plans, including Project Helix, the company’s next-generation gaming device currently under development.
